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Arkansas Energy Performance Contracting

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Is your organization facing outdated equipment, increasing maintenance and energy costs, and limited budgets? Energy Performance Contracting (EPC) is a tool for paying for efficiency upgrades such as lighting, chillers, boilers, water systems, and renewable generation over time. The Arkansas Energy Office offers assistance to state agencies, institutions of higher learning, municipalities, and counties throughout the seven step EPC program. The program provides an effective and user-friendly process with standardized documents and help every step of the way. The Arkansas EPC Program was directed by law in 2013, developed by industry professionals and financial representatives in 2014, and expanded to include municipalities and counties in 2015.

Chet Howland

Energy Performance Contracting is a financing mechanism used to pay for energy efficiency improvements all at once that are then paid back through annual energy savings. The AEO provides technical assistance to state agencies and public institutions of higher learning, helping them navigate the process and ensuring that Pre-Qualified Energy Service Companies (see a list below) maintain the highest levels of quality. Furthermore, the AEO actively provides education and outreach on the components of Energy Performance Contracting, maintains contract documents, and sets industry standards for Energy Service Companies. For a detailed list of how the AEO-approved process works along with a checklist of important milestones and responsibilities, please look at the AEPC Program Manual below. Please contact Energy Finance Program Manager Chet Howland at howland@adeq.state.ar.us or (501)682-7319 with specific questions or concerns.

How Does It Work?

The AEPC Program is designed to offer a simple step-by-step approach to public and private partners alike, ensuring that guaranteed energy savings projects are developed in a highly communicative, safe environment. With pre-approved contract documents, procedures and technical support, program participants have help every step of the way. Click the links below for copies of all AEPC program documents.

Step 1: Introduction

Talk with the AEPC program team and/or pre-qualified Energy Service Companies (ESCOs). The program manual and policies and procedures below provide a comprehensive overview of program processes and requirements. If you're a potential fit and comfortable moving forward, sign a Memorandum of Understanding (MOU) to get started.

Choose from pre-qualified ESCOs, who have already agreed to use AEPC contracts and procedures. ESCOs will tour your facilities and then present to your staff. After interviewing, you have the option to select an ESCO and proceed forward.

Your selected ESCO will perform an complete audit of facilities, identifying potential energy cost-saving measures. Together, you'll create a baseline of energy consumption and choose which measures to include in the final project.

​Work with your ESCO and preferred financial providers to develop a contract and terms of repayment. The Arkansas Development Finance Authority (ADFA) may be able to assist with securing financing. You may choose to combine existing capital, grants, or rebates into one package to stretch your dollars. Tax-exempt municipal leases, revolving loan funds, leasing pools, and power purchase agreements are all common vehicles for financing performance contracts.

​Your ESCO will manage the construction process, and commission projects to ensure proper operations. One of the foremost benefits of the performance contracting process is the guaranteeing of construction costs. ESCOs will negotiate a Guaranteed Maximum (GMAX) price for construction during the project development phase, and are liable for all overruns. In short, do not expect costly unexpected change orders to hinder your project.

​Following the substantial completion of construction, the performance period begins. The ESCO monitors and verifies that guaranteed savings are being achieved, with oversight from the Arkansas Energy Office and 3rd party auditors if necessary. If there is any shortfall, the ESCO will pay you the difference.

​Work with the Arkansas Energy Office and your ESCO to develop a case study based on your experiences in the AEPC Program. Share your successes and lessons learned with your peers.

How Do I Get Started?

If you would like to explore the possibilities of performance contracting for your organization, contact Program Manager Chet Howland and/or any of the pre-qualified Energy Service Companies (ESCOs) below. The following ESCOs were certified to operate in Arkansas after a thorough vetting of finances, organizational structure, past experience, and technical capabilities. All ESCOs have a wide variety of specialities and expertise, so make sure to contact multiple ESCOs. Also, please note that all ESCOs in the AEPC program are reevaluated on an annual basis, to ensure high quality work and commitment to the state.